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Crossing the Chasm

In the discussion of equilibria points in reservation price graphs, we discussed the existence of stable equilibria and non stable equilibria. In particular, we noted that the unstable equilibrium was frequently called the “tipping point”, since this was a point that needed to be overcome to achieve widespread adoption. Crossing the Chasm by Geoffrey Moore is a book dedicated to provide aspiring entrepreneurs with pragmatic advice to overcome the tipping point. All of the points that he identifies has logical explanations grounded in the network effects theory that we’ve so far encountered. The titular “chasm” that Moore refers to is analogous to the gap between the stable 0 equilibrium point and the unstable equilibrium point.

In his analysis, Moore identifies four types of consumers: innovators, early adopters, early majority, late majority and laggards. What’s striking about Moore’s analysis is how each group’s behavior can be defined by network effects.

  • Innovators: Moore defines innovators as individuals who like to test new products, and can ignore missing elements. Because they enjoy technology so much,  they correspond to customers who are closer to 0 in the interval [0,1] , so their reservation price is high.
  • Early Adopters: Early adopters are individuals who are attracted by high risk, high reward ventures. Again, this means that they are closer to 0 in the interval [0,1], so their reservation price is high.
  • Early Majority: The early majority is defined as individuals who need strong references from trusted peers to adopt the technology. This directly translates to people who are closer to 1 in the interval [0,1]  and will only adopt the technology if they expect z to be high enough.
  • Late Majority: The late majority is defined as individuals who will only adopt the product in fear of getting left behind. This translates to people who are closer to 1 in the interval [0,1] and will only adopt the technology if z is very high.
  • Laggards: Laggards are people who dislike changes. As a result, these people are very close to 1 in the interval [0,1]  and even with high z values, will have low reservation prices. As a result, they correspond to individuals with very low reservation prices.

After defining these groups, Moore addresses how entrepreneurs can cross the chasm. The chasm is described as the gap between early adopters and the early majority. Moore explains that this gap is difficult to cross, because the early majority are only likely to adopt the technology if they know enough peers who are using the technology. This is very similar to the idea of crossing the tipping point, as this also equates to z being high enough (if people believe enough people will adopt the product). Moore further explains that after we get the early adopters to come on board, the late majority will soon follow suit. This is analogous to how we observed that crossing the tipping point will result in the number of customers to be pushed towards the second stable equilibrium point. Moore also observes that the laggards are difficult to persuade, even with a large portion of the population already adopting the technology. This corresponds to the observation that once we reach the stable equilibrium point, we lose momentum and are likely to stay at the stable equilibrium.

One of the strategies that Moore suggests is to target one specific “kingpin” (capturing one specific market). Moore goes as far as to describe the early majority segment as a “bowling alley” since once the kingpin is down, this will cause a domino effect and knock down the rest. This is analogous to the fact that once you gain enough mass (get a high enough z value to cross the tipping point), more and more people will start adopting your product. Moore also suggests marketing to a “beachhead niche” of specific customers and meeting their specific needs. This corresponds to increasing the r(z) values for these specific customers, as you are trying to increase the value they have for the product.

Relevant online reviews of the book:

1. https://www.techinasia.com/crossing-the-chasm-book-review-geoffrey-moore/

2. http://web.mit.edu/wdc/www/chasm.htm

Amazon Link to the book

http://www.amazon.com/Crossing-Chasm-Marketing-High-Tech-Mainstream/dp/0060517123

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